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Federal Tax; State Budget and Tax; Health; Social Security; Economy; Poverty and Inequality; Food Assistance; Income Security; Housing; Climate Change; Immigration; Policy Basics. A series of brief background reports on issues related to budgets, taxes, and government assistance programs.
- Unitary Group Opportunities
- Functional Integration
- Centralization of Management
- Economies of Scale
- Jurisdictional Inconsistency
- Sources
While combined reporting often limits potential opportunities for impacted businesses through the imposition of mandatory rules under separate reporting regimes, several opportunities may be available, including defining the unitary group subject to combination, as well as apportionment planning in the proper calculation of the sales factor. In mos...
The functional integration test looks to shared functions and refers to transfers between, or pooling among, business entities that significantly affect the operation of the business activities.5Generally, functional integration includes, but is not limited to, transfers or pooling with respect to the business’s products or services, technical info...
The centralized management test focuses on not the ability to control but the actual amount of common control exercised between business segments. Centralization of management exists when directors, officers, and/or other management employees jointly participate in the management decisions that affect the respective business activities and that may...
The economies of scale test focuses on whether there is any income earned as a result of shared functions, activities, or operations. Economies of scale refer to a relation among and between business activities resulting in a significant decrease in the average per-unit cost of operational or administrative functions due to the increase in operatio...
Currently, approximately 30 jurisdictions mandate unitary combined reporting for general corporations that are commonly owned or controlled. However, notwithstanding the constitutional tests discussed above, these states adopt varying statutory definitions of “unitary” for purposes of combined reporting. Even in cases where the definitions in diffe...
Butler Brothers v. McColgan, 315 U.S. 501 (1942); See also 17 Cal. 2d 664.Edison California Stores v. McColgan, 183 P.2d 16 (1947).Mobil Oil Corp. v. Commissioner of Taxes of Vermont, 445 U.S. 425 (1980).Ibid.People also ask
Should a state impose mandatory unitary combined reporting?
Should state combined groups exclude taxpayers subject to other tax regimes?
Should MUCR states allow consolidated elections?
A thorough discussion of the problems associated with MUCR can be found in the study prepared for COST by Ernst & Young LLP, “Understanding the Revenue and Competitive Effects of Mandatory Unitary Combined Reporting” (www.cost.org). 122 C Street, N.W., Suite 330 Washington, DC 20001-2109 Tel: 202/484-5222 Fax: 202/484-5229.
Dec 8, 2010 · The state contended that GEH and FVI were required to file Maryland income tax returns and pay tax on royalty and interest income on a modified apportionment formula. The royalty income earned by GEH was generated by the Maryland manufacture of products by W.L. Gore and the subsequent sale of goods to Maryland customers.
For additional information about these items, contact Mr. Fairbanks at (202) 521-1503 or greg.fairbanks@gt.com. The use of mandatory unitary combined reporting has become increasingly popular among states in recent years, driven by state budgetary shortfalls and the perceived distortion of taxable income by multistate corporations filing ...
activity of the unitary group generating income in the state. However, especially when coupled with the Joyce method, states should not adopt throwback or throwout rules consistent with the COST Policy Statement. Throwback and throwout laws tax income that is, by definition, earned outside of the state, and such laws tax that income at the ...
Feb 24, 2017 · The most effective approach to combating corporate tax avoidance is combined reporting, a method of taxation currently employed in more than half of the states that tax corporate income. The two most recent states to enact combined reporting are Rhode Island in 2014 and Connecticut in 2015. In several states, including Connecticut, Illinois ...
